It is widely agreed that increased productivity is the main contributor to economic growth in U.S. agriculture. The level of U.S. farm output was about 2.7 times its 1948 level in 2013, growing at an average annual rate of 1.52 percent. Aggregate input use increased at a modest 0.05 percent annually in the same period, so the positive growth in farm sector output was very substantially due to productivity growth, which increased at an average 1.47 percent per year.
Single-factor measures of productivity, such as corn production per acre (yield or land productivity) or per hour of labor (labor productivity), have been used for many years because the underlying data are often easily available. While useful, such measures can also mislead. For example, yields could increase simply because farmers are adding more of other inputs, such as chemicals, labor, or machinery, to their land base. USDA produces measures of total factor productivity (TFP), taking account of the use of all inputs to the production process.
Specifically, annual productivity growth is the difference between growth of agricultural output and the growth of all inputs taken together. Productivity, therefore, measures changes in the efficiency with which inputs are transformed into outputs. USDA also produces State-level productivity measures (annual growth rates as well as cross-State differences in levels) of productivity, or differences in output per unit of combined inputs. Input measures are adjusted for changes in their quality, such as improvements in the efficacy of chemicals and seeds, changes in the demographics of the farm workforce, or innovations in machinery design. As a result, agricultural productivity is driven by innovations in on-farm tasks, changes in the organization and structure of the farm sector, and research aimed at improvements in farm production. In the short-term, measured agricultural productivity can also be affected by random events like the weather.
– U.S. agricultural productivity growth compares favorably to agricultural productivity growth in other industrialized countries, and to productivity growth in the overall U.S. economy.
– The level of U.S. farm output more than doubled between 1948 and 2013, growing at an average annual rate of 1.52 percent. Aggregate input use increased at a modest 0.05 percent annually in the same period, so the positive growth in farm sector output was very substantially due to productivity (sometimes referred to as total factor productivity, or TFP) growth, which increased at an annual 1.47 percent over the 1948-2013 period.
– During the 2007-13 subperiod, growth in output maintained an average annual rate of about 0.9 percent, comparable to that in the 2000-07 subperiod (the subperiods are measured from cyclical peak-to-peak in aggregate economic activity). During 2007-13, however, input use declined 0.54 percent per year (compared to increasing 0.32 percent per year over 2000-07), and measured average annual TFP growth rate rebounded from 0.6 percent during 2000-07 to 1.45 percent during 2007-13.